On the Demand for Federal Crop Insurance

Yang Wang and Francis Annan

No 235250, 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association

Abstract: There are ongoing policy debates about why the Federal government subsidizes crop insurance, which effectively rests on our understanding of the market context of insurance demand. There is mounting empirical evidence about how price sensitive producers in the United States are to participating in crop insurance, generally suggesting a wide range of elasticities. Research challenges remain, however, and the existing evidence is relatively outdated. Most of these studies fail to address the endogenity of insurance premiums. We address these challenges and attempt to provide well-identified elasticity estimates that reflect current state of the world of the Federal crop insurance program, using a variety of methods. We explore the fraction of planted acreage insured as our main outcome of interest. Our preferred model which exploits exogenous variations from major Federal subsidy policy changes provides a demand elasticity of -0.79. The results are crucial for ongoing debates and have important policy implications for the Federal crop insurance program.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Pages: 24
Date: 2016-05-16
New Economics Papers: this item is included in nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/235250/files/2016AAEA.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea16:235250

DOI: 10.22004/ag.econ.235250

Access Statistics for this paper

More papers in 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().